Credit Herald

Japan’s Prime Minister Yukio Hatoyama failed to persuade one of his coalition partners to accept his stimulus package, delaying its release until next week.

Hatoyama’s plan to announce spending of as much as 4 trillion yen ($45.4 billion) today was blocked by Financial Services Minister Shizuka Kamei, head of one of the two minority parties that the Democratic Party of Japan needs to smooth the passage of legislation. Chief Cabinet Secretary Hirofumi Hirano said it will probably be agreed upon on Dec. 7.

“We cannot destroy the coalition,” Hatoyama told reporters in Tokyo. “However, there’s an issue of fiscal restraint, making it hard to increase the package.”

The delay threatens to undermine the premier’s leadership in reviving the world’s second-largest economy, which faces deflation, joblessness and a strong yen. Kamei, head of the People’s New Party, wants a package twice the size of what Hatoyama has proposed.

“Stimulus packages need to be fast, it’s not something that can be mulled over into next year,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “The faster it’s rolled out, the more effective it will be.”

Outspoken

Kamei has been an outspoken member of Hatoyama’s cabinet no fax payday loans. He accused the Bank of Japan of sleeping on the job, and blamed the country’s biggest business lobby for rising murder and suicide rates. In an interview this week, he called on Japan to ask the U.S. and Europe to join in coordinated action to weaken the yen, which has risen 5.4 percent in the past three months.

His party has a total of eight seats — about 1 percent — in both houses of parliament. Hatoyama’s DPJ won a landslide victory in August, claiming 311 of the 480 seats in the lower house.

“The public is going to wonder why the DPJ government is being dragged around so much by smaller parties after it clearly won the election,” said Yasunori Sone, political science professor at Keio University in Tokyo. “People may be less tolerant if the economy worsens.”

Mikio Shimoji, head of policy research for Kamei’s PNP, said Kamei won’t compromise on the size of the package.

“Unless it’s around 8 trillion yen, the economy won’t respond,” he said. The DPJ “has no choice but to bow down.”

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